3.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study3
The rise of India as a global IT hub is well-chronicled. Coupled with this global footprint, we are now
witnessing a strong thrust within the country to partner with the government in enhancing governance
and to enable inclusive growth.
eGovernance initiatives at the centre, state, districts as well as the block, village level are creating
the channel for the government to build citizen-centric services, enable delivery of government rural
schemes, provide access to information and enhance its overall governance and service delivery.
The eGovernance initiative in India is now entering its next phase of ICT-led governance reforms and
public private partnership is an important enabler for realising the vision of transformed, citizen-centric
governance. NASSCOM is building a close partnership with the government to achieve this vision.
There is also a fundamental shift in the way the government is procuring IT and eGovernance services
with a clear focus on outcomes and service delivery. The relationship between the government and
industryismovingfromavendor-buyertowardsamorestrategicpartnership.Toenablethispartnership,
it is imperative that the process of procurement is aligned, transparent and accountable for both the
industry and government.
NASSCOM through an extensive research and interview process has put together a detailed report
‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’.
The study identiﬁed key issues and challenges, faced during the various phases of an eGovernance
project lifecycle. From conceptualisation through bid process, contracting to execution and Post
Go-Live phases. The report has also studied the best practices in India and overseas. The
recommendations of the report outline the key steps that need to be enabled for an effective public
procurement process, for IT services, in the country.
With support from the government, NASSCOM will take these ﬁndings and recommendations across
central and state departments and initiate a process to address the current challenges and build a
procurement process, that will help the country realise its eGovernance vision through partnership
with the IT industry.
I would specially like to thank the officials at the Department of Information Technology, Ministry
of Communications and Information Technology and all the state IT secretaries and department
officers, NeGP mission leaders, who proactively participated in this study, and shared candid feedback
and suggestions.
I hope this report will lay the foundation for a deeper dialogue between the government and
the IT industry partners, in improving the way, IT services and eGovernance projects are procured
and executed.
Som Mittal
President
Foreword

4.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study4
This study was conducted and report was developed by NASSCOM, with support and guidance from
several members from the state, central governments, consultancy organisations, and IT industry.
We would like to thank various people for their valuable contributions without which this report would
not have been possible. First, we would like to thank all officers of the central, state governments and
their departments and agencies who have helped us successfully conduct the study and provide very
valuable government perspective. We would like to specially thank Shri S R Rao, Mr J Satyanarayana,
for helping us frame the scope of study and its methodology.
Special thanks are due to TAGUP team chaired by Mr Nandan Nilekani.
We would like to thank the Canara Bank IT team, and Mr B Shandilya.
We would also like to thank our executive council for their valuable counsel and guidance. Special thanks
are due to Ashank Desai, Ganesh Natarajan, Krishna Kumar, Ravi Venkatesan, who have guided the
study and report development from concept to closure.
We would like to acknowledge the valuable inputs from Srinivasan Ramakrishnan Ex-DG of CDAC,
Prakash Kumar and Joan McCalla of CISCO, IDFC, NISG and PwC teams.
We would also like to acknowledge the valuable feedback provided by several government and IT
industry participants on this study and its ﬁndings, during the ﬁve regional consultations workshops
conducted by the Department of IT, in partnership with NASSCOM, during September to November
2010, at Chandigarh, Chennai, Kolkata, Mumbai, Lucknow.
A special acknowledgement to the NASSCOM eGovernance team, Pratap Reddy and Anirban Mukerji,
for their efforts and contribution towards this report.
Som Mittal
President
Acknowledgements

5.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study5
We would like to thank the following organisations and their teams for participating in
this study and providing invaluable inputs on issues, challenges and also helping in drawing up
the recommendations.
Government
Department of Information Technology, Government of India and its units, NeGD, UIDAI, Planning
Commission, Ministry of Home Affairs, Department of Industrial Promotion and Policy
Government of Andhra Pradesh, ELCOT, Gujarat Informatics, Government of Karnataka, Government
of Tamil Nadu, Government of West Bengal
Consultants
Ernst & Young, IDFC, IL&FS, NISG, PwC
IT Industry
3i Infotech, ABM Knowledgeware, CISCO, CMS Computers, COMAT Technologies, HCL Infosystems,
HCL Technologies, Humanitics, Infosys, L&T Infotech, Mastek, Microsoft, Mindtree, MobMe,
NIIT Technologies, Payada Technologies, Radiant, Ram Informatics, TCS, UTL, Wipro, Zensar,
Zylog Systems

7.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study7
In the past few years, eGovernance has gained considerable momentum in India, with many high impact
projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B)
domains, across central ministries and state departments. NeGP Mission Mode Projects, and several
strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped
redeﬁne the government service delivery to rural, urban citizens and businesses, by making several
services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP
Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample
of eGovernance initiatives, executed successfully with the support and partnership of the industry.
From the earlier focus on hardware-centric procurement, most projects are now moving to deﬁning
servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating
a fundamental shift in the way the government is procuring IT and IT services. Hardware and even
application development are now being considered more as building blocks towards an end outcome
rather than as key requirements. The relationship between the government, the buyer and industry,
the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term.
This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states
and eGovernance infrastructure projects like SWAN, SDC.
An objective analysis of the entire eGovernance landscape shows that, several projects and their
execution are faced with a lot of challenges. Several projects have failed, and have been shelved
because of ﬂaws at different stages: their conceptualisation, scope deﬁnition, vendor selection and
poor execution due to the shortcomings both on the government and the implementing vendor’s side.
Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for
both buyers (i.e. government departments) and potential bidders.
NASSCOM through an extensive research and interview process has put together a detailed report
‘eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study’.
The study initiated by NASSCOM, in consultation with the Department of IT, is broadly targeted to
identify key issues and challenges, faced during the various stages of an eGovernance project lifecycle.
From conceptualisation through bid process, contracting to execution and Post Go-Live phases. The
report has also studied the best practices in India and overseas. The recommendations of the report
outline the key steps that need to be enabled for an effective public procurement process, for IT
services, in the country.
To understand the issues related to public procurement of eGovernance projects, and obtain best
practices and recommendations, the following methodology was adopted.
1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The
cross-section included to name a few:
a) Established large System Integrators (SIs) who have been implementing many eGovernance
projects like HCL Infosystems, TCS, Wipro
b) Established SME’s like ABM Knowledgeware, CMS, COMAT Technologies, UTL
c) Large and small organisations that have become active in the eGovernance domain like HCL
Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies
d) Global OEM organisations like CISCO, Microsoft
Executive Summary

8.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study8
e) Consultancy organisations like Ernst & Young, IDFC, IL&FS, NISG and
PriceWaterhouseCoopers
2) Studying a few landmark projects that have been outsourced in centre and states, to understand
the various issues, best practices regarding implementation
a) Elicit feedback of the government officers of the IT department and line departments at both
HoDandmidandjuniorofficersdrivingeGovernanceprojects.Thecross-sectionincludedseveral
states, central ministries, state nodal agencies, NeGP mission leaders
b) Speak to implementing service providers to identify issues and best practices from contract,
Go-Live and Post Go-Live phases
3) Studying the World Bank guidelines regarding public procurement
4) Studying the best practices and policies and model documents of PPP projects in the
infrastructure sector
5) Studying the IT procurement practices of the Government of Canada, Singapore
6) Understanding the IT outsourcing strategy and best practices of a public sector bank
Based on our research and interactions with a wide cross-section of state and central
government officers, NASSCOM team obtained some insightful feedback.
Government Perspective
Key highlights of feedback from government officers is as follows:
Internal eGovernance capacity
• Government needs to develop overall capacity of the government employees in managing IT and
eGovernance projects
- Bolster capacity within the government by training, recruiting staff
- Establish a specialist service for handling eGovernance projects & IT function
• Government officers do not have deep understanding of technology solutions and their
implementation and hence, are constrained in devising and monitoring service level agreements
and contract management of IT projects
Government feedback to industry
• Industry project teams should build eGovernance and functional/domain skills
• Delivery resources assigned to eGovernance projects is not at par with resources being assigned
to their global customers
• The eGovernance sector is not a priority for a majority of industry members
• Industry members should refrain from submitting low, unviable commercial bids, as it not only
impacts the vendor’s quality of delivery, but often leads to the termination and litigation, impacting
the government’s plans and service delivery to citizens
• “Industryshouldchangeitsfocusfromproduct orientation tocitizen servicedeliveryin eGovernance
projects. The industry is still oriented towards the supply of goods and services and the service
orientation which is the core of all eGovernance services is lacking” – a state IT secretary

9.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study9
Industry issues & challenges
• A wide cross-section of the industry respondents, provided a total of 296 issues which were distilled
to 170 unique issues related to the procurement of eGovernance and IT services
• These issues can be grouped into 19 categories of issues
• Maximum issues & challenges are witnessed in
- Project execution
- Project conceptualisation & Scope of Work (SoW)
- Contract, Terms and Conditions (T&C)
• Lack of continuity of project champion is a challenge across most projects
- Sign-off’s given by a government officer regarding a project, are not accepted by the successor.
Many times the successor likes to re-evaluate/review the certiﬁcation of work, and even SoW
& Contract
• Delays in deliverables from the government
• Delays in giving timely sign-offs to vendors both by the department and third-party audit
- Department PMU not empowered to take appropriate decisions, in the interest of project
implementation. This issue was highlighted even by the government respondents
• Project bids incorporate many non-IT items as well, which increase the project cost manifold. This
leads to an increase in pre-qualiﬁcation turnover criteria, impacting the opportunity of small and
medium players, and also risk overload by all vendors
• Projects incorporate requirements like lease rental, diesel for running of gensets
- Cost estimation is a guesswork, both on the extent of grid power outages, and cost of
diesel over a ﬁve year tenure. Indexing such input costs to a base price and factoring escalation
is missing
• No counter guarantees, built into the SLAs, for default by the government and
government agencies
• Pre-qualiﬁcation norms is a challenge for both incumbent SME and large, SME organisations
entering the eGovernance domain
• Some contracts have unlimited liability terms with no caps linked to contract value and payments
to date
• Most PPP projects are first-of-a-kind project and it is difficult to anticipate transaction
volumes. Further, they are dependent on a number of upstream activities like computerisation of
back-end departments
- Given the risks in these projects, there should be some risk mitigation measures, counter
guarantees to reduce the investment risk of the bidders
- PPP projects not designed in a manner to enable re-negotiation in both cases of windfall gains
or losses to vendor. This point was also reiterated by the government respondents
Key recommendations from the study
• Model RFPs, contracts, MSA for different category of projects

10.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study10
- Themodeldocumentswerecommend,arepreparedbyajointgovernment-consultants-industry
team (including representatives from the banking sector, IDRBT)
- Review by a joint government-consultants-industry panel including DIT, Department
of Expenditure
- Customise these for state projects, and drive uniformity
- Contracts should incorporate ‘Conditions of Precedent’ and obligations of the government
departments and agencies
- SLAs and events of default to be deﬁned for both vendor and government departments
and agencies
- Incorporate the best practices of infrastructure concessionaire agreements and model
documentspublishedbythePlanningCommissionfortheinfrastructuresector,intoeGovernance
PPP projects
- Toolkits for PPP, BOOT projects and business model options to guide departments
• Similar to pre-bid meetings, standardise on suppliers debrieﬁng, post project award
• Project governance structure
- Publish a model for different category of projects
- Government project team resourcing & skills proﬁle across lifecycle stages
- Consult enterprise CIOs, industry and banking PSUs in ﬁnalising this
• Dispute resolution & arbitration guidelines
- Panel of retired officers from the government and academia, knowledgeable with IT
projects execution
- Evaluate alternative dispute resolution mechanism on the lines of procurement Ombudsman
of Canada
• Centralised digital repository of all information assets of bids, projects – on a secure
government network
- RFPs, pre-bid queries, bid amendments, contracts, MSAs
- Project reviews, audit reports, impact assessment reports
- Vendor defaults/force majeure situations
Industry actionables
• eGovernance functional/domain skills for delivery teams
• Sensitisation of industry leadership on failed projects due to unviable bids, vendor defaults, project
termination, litigation and their impact on the government
- Help drive rigor into bid review process of their sales teams
• NASSCOM to build a repository of
- Success stories, case studies in eGovernance
- Learnings from failed projects
The study report and its ﬁndings and recommendations, we hope will initiate a deeper dialogue
between the government and industry, to address the current challenges and help the country realise
its eGovernance vision, through partnership with the IT industry.

13.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study13
In the past few years, eGovernance has gained considerable momentum in India, with many high impact
projects being implemented in both Government to Citizen (G2C) and Government to Business (G2B)
domains, across central ministries and state departments. NeGP Mission Mode Projects, and several
strategic eGovernance initiatives in states, executed in partnership with the IT industry, have helped
redeﬁne the government service delivery to rural, urban citizens and businesses, by making several
services online and 24/7. MCA21, UIDAI, Customs and Central Excise, Integrated Citizen Services like MP
Online, Karnataka One, CSCs, NREGA, eProcurement, HRMS, SWANs and SDC are just a small sample
of eGovernance initiatives, executed successfully with the support and partnership of the industry.
From the earlier focus on hardware-centric procurement, most projects are now moving to deﬁning
servicesandoutcomes.MostprojectDPRs,RFPsandservicesagreements,contractsaredemonstrating
a fundamental shift in the way the government is procuring IT and IT services. Hardware and even
application development are now being considered more as building blocks towards an end outcome
rather than as key requirements. The relationship between the government, the buyer and industry,
the service provider, is moving towards a more strategic outsourcing relationship over a 5-7 years term.
This has been the direction for some of the larger Mission Mode NeGP projects both in centre and states
and eGovernance infrastructure projects like SWAN, SDC, etc.
1.1 Various modes of contracting for IT services
Dependinguponthesizeandnatureofprojectsindifferentministriesanddepartments,thegovernment
has been adopting different modes of contracting for IT services.
1.1.1 Outright procurement of IT goods and services
The government department issues a RFP with requirements and timelines for delivery of the goods
and services and makes payments for the same based on delivery milestones. Commonly these
requirements are simple in nature like the development of a software solution, supply of hardware.
Most RFP’s have a clause related to maintenance of the software application or IT equipment which
is paid for separately.
1.1.2 Turnkey contracts
The government department identiﬁes a complex project with a set of services, and prepares a RFP
for all components required for the delivery of these services, to the government department. The
components would include application solution development, supply, installation of hardware and
system integration. Guarantee of performance as per SLA; and Operation & Maintenance (O&M) of the
solution, infrastructure for a speciﬁed period of time is often part of the scope. Such turnkey projects
may encompass a comprehensive scope of work including components of data entry of legacy data,
training for government officers, implementation support comprising staffaugmentation of operators.
In some cases, provisioning the facilities including civil work, supply of furniture, back-up power through
generators, may also be included in the scope of work.
Mostly turnkey contracts may be milestone-based payments or on a deferred payment (quarterly
guarantee) mode, subject to the turnkey operator meeting the prescribed SLA’s for both installation
and operation of the IT systems and solution.
Introduction

14.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study14
The term of such comprehensive turnkey contracts normally range from 3-7 years and post completion,
the vendor transfers the operations to the government or a designated government agency or to an
alternate vendor selected by the government.
1.1.3 Public Private Partnerships (PPPs)
PPPs are projects involving investments by the private sector partner with its associated risks and
rewards based on volume and type of services delivered. The government in such case, contracts for
delivery of services over an agreed project tenure. Well known examples of such projects are those
like eSeva, eProcurement in Andhra Pradesh, Bangalore One in Karnataka, MP Online, the recently
commenced Passport Seva Project for Ministry of External Affairs. In the case of projects like eSeva,
Bangalore One, the vendor is mandated to create both the physical citizen service centre and the
IT infrastructure and receives fee based on the services delivered to the citizens, though subject to
stringent service level agreements. The time period for operations of such PPP projects are normally
5-7 years and the vendor would mostly transfer the assets and project operations to the government
or another identiﬁed vendor. PPP projects may be Build Own Operate Transfer (BOOT) or Build Own
Operate (BOO).
1.2 Issues in eGovernance project implementation
An objective analysis of the entire eGovernance landscape shows that, several projects and their
execution are faced with a lot of challenges. Several projects have failed, and have been shelved
because of ﬂaws at different stages: their conceptualisation, scope deﬁnition, vendor selection and
poor execution due to the shortcomings both on the government and the executing vendor’s side.
Issues related to public procurement of IT projects (eGovernance projects) are a cause of concern for
both buyers (i.e. government departments) and potential bidders.
Lack of capacity in several government departments to conceptualise, design, execute and monitor
projects has been a big constraint. The conceptualisation of the project including technology choices,
business model choices, SLAs need to be thought through differently for each category of project and
articulated in the RFP. In many cases like the, SWAN, SDC and eDistrict projects, DIT has been playing
a supportive role by appointing consultants both at the central and state level for preparing RFP’s,
assisting in bid evaluation and also providing for third-party audits. However, there continues to exist
signiﬁcant challenges during the implementation of these projects.
Private sector bidding for eGovernance projects also face many issues like improperly drafted scope
of work, requirements and terms and conditions, SLAs which could lead to potentially heavy liabilities
and penalties during implementation.
The ecosystem of organisations focused on eGovernance implementation consists of diferent types of
organisations with very large global & national System Integrators (SIs) to smaller local organisations.
Often there is seen a mismatch in the project scope and sizing, and bidder eligibility criteria. The
issues range from over specking, thereby denying a level playing ﬁeld for small & medium players and
even for large players who are new entrants into eGovernance. In some projects, the eligibility criteria
may be diluted, thereby impacting successful execution and leading to termination, re-tendering or
scrapping of the project.
1.3 Role of National Informatics Centre (NIC)
NIC has played a pioneering role in the computerisation of several departments both at the state and
central level. Several ﬂagship eGovernance initiatives in Land Records, Transport, and Agriculture

15.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study15
amongst others have been successfully implemented by the NIC across the country. Historically,
the NIC has been the promoter of computerisation, thus becoming internal EDP department of the
central government departments and state governments. However, over time, nature and type of
eGovernance service delivery and mandated service levels and business models, have undergone
signiﬁcant changes.
Currently, all projects are awarded to the NIC on a nomination basis, without a competitive bid process
and also without the associated terms and conditions, service level agreements, contracts that are
applied when goods and services are procured from or outsourced to private sector entities. NIC plays
a technical advisory role in some projects being executed by the private sector. When projects are
handed over to the NIC, the departments have had the comfort of avoiding a complex RFP process,
bid and project management. However, for eGovernance projects outsourced to the private sector, the
government departments need to undertake the exercise of project conceptualisation and scoping, bid,
project management, governance structures, SLAs monitoring, third-party audit and so on. Internal
capacity and resources to support this exercise has been a barrier in many eGovernance initiatives.
1.4 Existing public procurement guidelines
There exists comprehensive guidelines regarding public procurement issued by
1) Department of Expenditure of Ministry of Finance, has issued a Manual of Policies and Procedures
for Employment of Consultants, for Works Contracts & Purchase of Goods and General Financial
Rules 2005
2) Most states have a ﬁnancial code and procurement guidelines, mostly for public works contracts
3) Ministry of Finance has issued very comprehensive guidelines, forms, policy documents for PPP
projects in infrastructure sector
4) Karnataka has legislated a Karnataka Transparency in Public Procurement Act and rules
5) Central Vigilance Commission has issued various circulars and guidelines regarding public
procurement procedures
A comprehensive review of all existing guidelines, and identifying their best practices would help
customise and/or incorporate relevant guidelines, policies in procuring/outsourcing eGovernance
Projects too.
1.5 Objectives of the NASSCOM study
The study initiated by NASSCOM, is broadly targeted to identify key issues and challenges, faced during
the various stages of an eGovernance project lifecycle. From conceptualisation through bid process,
contracting to execution and Post Go-Live phases.
1. Project conceptualisation and development including associated processes of
a. Pre-qualiﬁcation norms for bidders
b. Payment model/Business model
c. Requirements deﬁnition and Scope of Work (SoW)
d. Contract (terms and conditions document, services agreement) including associated
processes of
i. Dispute resolution process

16.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study16
2. Bidding phase process including associated processes of
a. Tender publication
b. Process of pre-bid meetings and issue of pre- bid clariﬁcations
c. Tender submission process
d. Tender evaluation process
e. Awarding of contract to selected bidder
3. Project execution including associated processes of
a. Third-party audit
4. Post implementation
5. Speciﬁc issues related to
a. PPP projects
6. Unfair procurement practices and vendor defaults
1.6 Methodology for study of public procurement of eGovernance
projects
To understand the issues related to public procurement of eGovernance projects, and obtain best
practices and recommendation, the following methodology has been adopted.
1) Discussions with a cross-section of organisations engaged in the eGovernance domain. The
cross-section included to name a few:
a) EstablishedlargeSIswhohavebeenimplementingmanyeGovernanceprojectslikeHCLInfosystems,
TCS, Wipro
b) Established SMEs like ABM Knowledgeware, CMS, COMAT Technologies, UTL
c) Large and small organisations that have now become active in the eGovernance domain like
HCL Technologies, L&T Infotech, Mindtree, MobMe, Payada Technologies
d) Global OEM organisations like CISCO, Microsoft
e) Consultancy organizations like Ernst and Young, IDFC, IL&FS, NISG and
PriceWaterhouseCoopers
2) Studying a few landmark projects that have been outsourced in centre and states, to understand
the various issues, best practices regarding implementation
a) Elicit feedback of government officers of the IT department and line departments at both HoD
and mid and junior officers driving eGovernance projects. The cross-section included several
states, central ministries, state nodal agencies, NeGP mission leaders
b) Speak to implementing service providers to identify issues and best practices from contract,
Go-Live and Post Go-Live phases
3) Studying the World Bank guidelines regarding public procurement
4) Studying the best practices and policies and model documents of PPP projects in the
infrastructure sector
5) Studying the IT procurement practices of the Government of Canada, Singapore
6) Understanding the IT outsourcing strategy and best practices of a public sector bank

18.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study18
In a study focused on eGovernance and IT services procurement in the government, we considered it
was important to review and summarise the existing public procurement guidelines, and delineate
their applicability to IT services domain. The following guidelines were reviewed through documents
available in the public domain, coupled with discussions with key stakeholders:
• General Financial Rules 2005 (GFR)
• Central Vigilance Commission (CVC) Guidelines
• Procurement Guidelines of IBRD, IDA
- ForprojectsﬁnancedbyaloanfromtheInternationalBankforReconstructionandDevelopment
(IBRD) or a credit or grant from the International Development Association (IDA)
2.1 General Financial Rules 2005
Introduction
The General Financial Rules (GFR) 2005 of the Department of Expenditure, Ministry of Finance were
evolved after an extensive review of four-decade old GFR 1963. The review was necessitated by changes
in system of procurement, developments in information technology and alternative service delivery
systems including the outsourcing of services. GFR 2005 is a compendium of rules and guidelines for
the expenditure of Government of India and includes a complete chapter on rules, for procurement
of goods and services.
Execution of works
The Chapter 5 of the GFR lays down rules for the execution of works, where ‘works’ broadly refers to
constructions and alterations, repairs to existing works or structures. For most works above a certain
value, it recommends execution of the work through a public works organisation.
Rule 124 – ‘Administrative Control’, highlights the assumption of full responsibility for construction,
maintenance and upkeep, and provision of funds for execution of these functions. Although the rule
is explicitly deﬁned in the context of construction works, it has a pertinent point for eGovernance
projects, namely:
• The need for ongoing maintenance and support of IT systems and solutions and provision of funds
beyond the initial phase of an eGovernance project, IT solutions/services procurement
• Several eGovernance initiatives have been constrained by being primarily focused on the
‘construction’ or development phase and its funding. Several eGovernance projects are initiated
through one-time funding under a central government programme, or an external aid agency, and
states or departments have not been able to sustain the funding, needed for ongoing maintenance,
enhancements. An equal focus on ‘maintenance, upkeep’ when a new eGovernance initiative is
conceptualised, will ensure investment in information technology solutions, services continues to
serve government objectives, in the long-term
• In the context of IT solutions and eGovernance projects, ‘maintenance, upkeep’ indicates ongoing
support, solution and features enhancements, upgrades of hardware, software, and provisioning
for their funding, on a year-on-year basis
Guiding Principles for Public Procurement

19.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study19
The GFR Rule 129 in Chapter 5 on works provides the following directive regarding the execution
of works:
No works shall be commenced or liability incurred in connection with it unless
1. Administrative approval needs to be obtained from appropriate authority
2. Sanction to incur expenditure to be obtained from competent authority
3. A properly detailed design has been sanctioned
4. Funds to cover the charge during the year have been provided by competent authority
This rule also has applicability in some eGovernance initiatives in states, that get launched in a
hurry, and get shelved due to non-availability of necessary approvals, budgetary sanctions or
inadequate funding.
Rule 134 provides important guideline on review of projects as following:
“After a project costing INR 10 crore or above is approved, the Administrative Ministry or
Department will set up a Review Committee consisting of a representative each from the
Administrative Ministry, Finance (Internal Finance Wing) and the Executing Agency to review the
progress of the work. The Review Committee shall have the powers to accept variation within 10 per
cent of the approved estimates”.
While the NeGP Mission Mode Projects and large state eGovernance initiatives may have had clearly
deﬁned Review Committees, several eGovernance initiatives have suffered due to the absence of an
empowered committee to review. Most review committees, have also not had the empowerment or
probably the ﬂexibility to approve variations in cost estimates, approved during the bid phase. Several
eGovernance initiatives are ﬁrst-of-its-kind projects, and it is usually not possible to determine the
entire scope of work and solution features, and real constraints in delivering these services across the
entire state or country, spanning so many locations with their unique challenges. A Review Committee
empowered to accept a “10 per cent variation in approved estimates”, when a project so demands it,
will go a long way in successful implementation of eGovernance projects.
Learnings
Chapter 5 mainly concerns itself with construction works and additionally mandates as per Rule 126 that
construction works above a certain value should be executed through a public works organisation.
Despite the emphasis of the chapter on construction works, the following learnings can be
applied for the implementation of IT projects by government departments during the project
conceptualisation phase.
1. Due process in working out estimates, schedule of quantities, procedure and approvals from
competent authority
2. Equal focus on ongoing maintenance and upkeep and their funding, by the project implementing
department/agency
3. ReviewCommitteeforprojectsaboveacertainthreshold,withnecessaryempowermenttosanction
variations in cost estimates upto 10 per cent
4. Given that a ‘Public Works Organisation’ is not applicable in the context of eGovernance, IT services
projects, the government both at the states and centre could evaluate the role of the Department
of IT, or its IT nodal agency, as an enabling nodal department to guide all other departments.

20.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study20
Procurement of goods
The following rules regarding the procurement of goods and services is prescribed in Part 1 of
Chapter 6 of the GFR
1) Rule 137 lays down fundamental principles of public buying as following – Every authority delegated
with the ﬁnancial powers of procuring goods in public interest shall have the responsibility and
accountability to bring efficiency, economy, transparency in matters relating to public procurement
and for fair and equitable treatment of suppliers and promotion of competition in public
procurement. The procedure to be followed in making public procurement must conform to the
following yardsticks:
a) The speciﬁcations in terms of quality, type, etc., as also quantity of goods to be procured,
should be clearly spelt out keeping in view the speciﬁc needs of the procuring organisations.
The speciﬁcations so worked out should meet the basic needs of the organisation, without
includingsuperﬂuousandnon-essentialfeatures,whichmayresultinunwarrantedexpenditure.
Care should also be taken to avoid purchasing quantities in excess of requirement to avoid
inventory carrying costs
b) Offers should be invited following a fair, transparent and reasonable procedure
c) The procuring authority should be satisﬁed that the selected offer adequately meets the
requirement in all respects
d) The procuring authority should satisfy itself that the price of the selected offer is reasonable
and consistent with the quality required
e) At each stage of the procurement, the concerned procuring authority must place on
record, in precise terms, the considerations which weighed with it while taking the
procurement decision
2) Rule 140 delegates full powers to ministries and departments to make their own arrangement
for the procurement of goods. However, if a ministry or department does not have the required
expertise, it may project its indent to the Central Purchase Organisation
3) As per Rule 141, the Central Purchase Organisation (e.g. DGS&D) shall conclude rate contracts
with the registered suppliers, for goods and items of standard types, which are identiﬁed as
common user items and are needed on recurring basis by various central government ministries or
departments. The Central Purchase Organisation will furnish and update all the relevant details of
the rate contracts in its website. The ministries or departments shall follow those rate contracts
to the maximum extent possible
4) Rule 142 lays down detailed guidelines for registration of suppliers which are as following:
a) The Central Purchase Organisation (e.g. DGS&D) will prepare and maintain item-wise lists of
eligible and capable suppliers. Such approved suppliers will be known as ‘Registered Suppliers’.
All ministries or departments may utilise these lists as and when necessary. Such registered
suppliers are prima facie eligible for consideration for procurement of goods through limited
tender enquiry. They are also ordinarily exempted from furnishing bid security along with their
bids. A head of department may also register suppliers of goods which are speciﬁcally required
by that department or office
b) Credentials, manufacturing capability, quality control systems, past performance,
after-sales service, ﬁnancial background, etc. of the supplier(s) should be carefully veriﬁed
before registration

21.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study21
c) The supplier(s) will be registered for a ﬁxed period (between 1-3 years) depending on the
nature of the goods. At the end of this period, the registered supplier(s) willing to continue
with the registration are to apply afresh for renewal of registration. New supplier(s) may also
be considered for registration at any time, provided they fulﬁl all the required conditions
d) Performance and conduct of every registered supplier is to be watched by the concerned
ministry or department. The registered supplier(s) are liable to be removed from the list of
approved suppliers if they fail to abide by the terms and conditions of the registration or
fail to supply the goods on time or supply substandard goods or make any false declaration
to any government agency or for any ground which, in the opinion of the government, is not
in public interest
5) Rule 145 & Rule 146 allow only goods below INR 1 lakh to be purchased without a tender
6) Rule147prescribesrulesfordirectpurchaseofgoodsunderratecontractfromsuppliers.Itmandates
that the Central Procurement Organisation (e.g. DGS&D) should host speciﬁcations and prices on
its website
7) Rule 149 mandates unless the price of goods is below INR 1 lakh or is being purchased under a rate
contract, the department should follow a tendering process for goods procurement
8) Rule150prescribesdetailedguidelinesforopen‘Advertised’tenderenquiryforallgoodsprocurement
above INR 25 lakh
9) Rule 151 prescribes limited tender enquiry for goods procurement below INR 25 lakh where the
tender enquiry is limited to pre-registered suppliers as per Rule 142
10) Rule 152 prescribes a two bid system comprising a technical bid and a commercial bid for complex
procurement. It states that commercial bids of only technically acceptable offers should be opened
for further evaluation and ranking before awarding the contract
11) Rule 154 provides guidelines for single source procurement
12) Rule 155 prescribes the various section of a bidding document
13) Rule 157 provide guidelines for obtaining bid security from all bidders to safeguard against bidder
withdrawing or altering the bid during the bid validity period. It prescribes that the bid security
should be between 2-5 per cent of the value of goods to be procured and such bid security can be
of forms like demand draft, ﬁxed deposit receipt, bank guarantee, etc.
14) Rule 158 states the requirement of obtaining a performance security from bidders
15) Rule 160 states detailed guidelines (15 in number) on requirement of transparency,
competition, fairness and elimination of arbitrariness in the procurement process. Some of the
salient guidelines are:
a) The text of the bidding document should be self-contained and comprehensive without any
ambiguities. All essential information, which a bidder needs for sending responsive bid, should
be clearly spelt out in the bidding document in simple language. The bidding document should
contain, inter alia;
i) The criteria for eligibility and qualiﬁcations to be met by the bidders such as minimum
level of experience, past performance, technical capability, manufacturing facilities and
ﬁnancial position, etc.
ii) The procedure as well as date, time and place for sending the bids

22.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study22
iii) Date, time and place of opening of the bid
iv) Terms of delivery; special terms affecting performance, if any
b) Suitable provision should be kept in the bidding document to enable a bidder to question the
bidding conditions, bidding process and/or rejection of its bid
c) Suitable provision for settlement of disputes, if any, emanating from the resultant contract,
should be kept in the bidding document
d) The bidders should be given reasonable time to send their bids
e) The bids should be opened in public and authorised representatives of the bidders should be
permitted to attend the bid opening
f) The speciﬁcations of the required goods should be clearly stated without any ambiguity
so that the prospective bidders can send meaningful bids. In order to attract sufficient
number of bidders, the speciﬁcation should be broad based to the extent feasible. Efforts
should also be made to use standard speciﬁcations which are widely known to the industry
g) Pre-bid conference: In case of turn-key contract(s) or contract(s) of special nature for the
procurement of sophisticated and costly equipment, a suitable provision is to be kept in the
bidding documents for a pre-bid conference for clarifying issues and clearing doubts, if any,
aboutthespeciﬁcationsandotheralliedtechnicaldetailsoftheplant,equipmentandmachinery
projected in the bidding document. The date, time and place of pre-bid conference should
be indicated in the bidding document. This date should be sufficiently ahead of the bid
opening date
h) Criteria for determining responsiveness of bids: Criteria as well as factors to be taken into
account for evaluating the bids on a common platform and the criteria for awarding the contract
to the responsive lowest bidder should be clearly indicated in the bidding documents
i) Bids received should be evaluated in terms of the conditions already incorporated in the bidding
documents; no new condition which was not incorporated in the bidding documents should be
brought in for evaluation of the bids. Determination of a bid’s responsiveness should be based
on the contents of the bid itself without recourse to extrinsic evidence
j) Negotiation with bidders after bid opening must be severely discouraged. However, in
exceptional circumstances where price negotiation against an ad-hoc procurement is necessary
due to some unavoidable circumstances, the same may be resorted to only with the lowest
evaluated responsive bidder
k) In the rate contract system, where a number of organisations are brought on rate contract for
the same item, negotiation as well as counter offering of rates are permitted with the bidders
in view and for this purpose special permission has been given to the Directorate General of
Supplies and Disposals (DGS&D)
l) Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has
been found to be responsive and who is eligible and qualified to perform the contract
satisfactorily as per the terms and conditions incorporated in the corresponding
bidding document
m) The name of the successful bidder awarded the contract should be mentioned in the ministries
or departments notice board or bulletin or website

23.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study23
16) Rule 161 prescribes the need for efficiency, economy and accountability in public procurement
system. To achieve the same, it states that the following areas need to be addressed:
a) To reduce delay, appropriate time frame for each stage of procurement should be prescribed by
the ministry or department. Such a time frame will also make the concerned purchase officials
more alert
b) The ministries or departments should ensure the placement of contract within the original
validity of the bids. Extension of bid validity must be discouraged and resorted to only in
exceptional circumstances
c) The Central Purchase Organisation, should bring into the rate contract system more
and more common user items which are frequently needed in bulk by various central
government departments
Relevance to IT procurement by government departments
The GFR is fairly elaborate regarding goods procurement by central government departments and
endeavours to promote transparency in procurement. While the rate contracts of a Central Purchase
Organisation is relevant for standard procurement and supply of goods, most eGovernance projects
havecustomisedsolutions,servicestobeimplemented,includinginstallationandsupportrequirements
which vary from project to project.
GFR also recommends use of rate contracts method. While both DGS&D and state IT nodal agencies,
have effectively used this method for procurement of IT hardware and COTS software, there are some
challenges with respect to procurement of IT products.
1. IT products, particularly hardware see continuous upgradation and often downward decline
in pricing
2. Many IT products have a high rate of obsolescence and version changes. Sometimes upgrades
to products and new versions and releases may be unique to one or few vendors. Hence, a rate
contract administration may need to specially factor constant revision
3. There may be a variation in features and prices between similar categories of products from
different manufacturers. Most hardware and even COTS software like operating systems,
databases are usually conﬁgurations unique to a vendor, with speciﬁc features and enhancements.
Hence, a standardised rate contract for a similar category of IT product from different vendors is
a challenge
4. DGS&D rate contracts don’t incorporate the concept of a committed volume of procurement which
usually determines volume pricing
5. Most eGovernance and IT services projects do not procure ‘Goods’ in isolation, and hence, a rate
contract with a Central Purchasing Organisation, or a central IT nodal agency in the state, has
limited applicability
6. The GFR also states that a minimum of three weeks should be given for bid submission, and four
weeks for global bids. For a complex IT procurement tender, this time period may be extended to
six weeks, to ensure that all eligible bidders can participate
Procurement of services
The Part II of Chapter 6 provides guidelines on the procurement of services which as per Rule 163 relate
to procurement of consultancy services. Rule 164 states that Part II provides the fundamental principles

24.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study24
regarding the engagement of consultants, and ministries can issue detailed instructions which should
not contravene the basic rules of the Part II of Chapter 6. The various guidelines are as following:
1) Rule 165 states that consultants should be engaged only for high quality work for which the
department does not have expertise
2) Rule 166 states that the departments should prepare in simple and concise language the
requirement, objectives and the scope of the assignment. The eligibility and pre-qualiﬁcation
criteria to be met by the consultants should also be clearly identiﬁed at this stage
3) AsperRule168,forconsultancyassignmentsbelowINR25lakh,thedepartmentscanﬂoatrequests
for expressions of interest to a list of organisations gathered on the basis of formal or informal
enquiries with other departments, industry associations, however, for value of above INR 25 lakh,
the EOI should be advertised in one national daily and the department’s website
4) As per Rule 169, the evaluation of responses to the EOI should enable the shortlisting of a minimum
of three consultancy organisations
5) Rules 170 and 171 state the components of the terms of reference and the request for
proposal respectively
6) Rule 172 states that RFP should compulsorily ask for separate technical and ﬁnancial responses
with both these responses being sealed separately
7) Rule 174 states that technical bids should be analysed and evaluated by a Consultancy Evaluation
Committee (CEC) constituted by the ministry or department. The CEC shall record in detail the
reasons for acceptance or rejection of the technical proposals analysed and evaluated by it
8) Rule 175 states that the ministry or department shall open the ﬁnancial bids of only those bidders
who have been declared technically qualiﬁed by the CEC as per Rule 174 mentioned above for
further analysis or evaluation and ranking and selecting the successful bidder for placement of
the consultancy contract
9) Rule 176 states that in case of single source procurement, justiﬁcation should be recorded
and approval should be obtained from competent authority prior to resorting to single
source selection
10) Rule177mandatesthatthedepartmentshouldbeinvolvedthroughoutintheconductofconsultancy,
preferably by taking a task force approach and continuously monitoring the performance of the
consultant(s) so that the output of the consultancy is in line with the department’s objectives
Outsourcing of services
A sub-section of Part II of Chapter 6 of the GFR deals with the outsourcing of services. Rule 178 states
that services may be outsourced in the interest of economy and efficiency. The directives regarding
the outsourcing of services are not as comprehensive as those for goods and consultancy services.
Comments on procurement of services to eGovernance services
The section of procurement of services is not as comprehensive as the section for procurement of
goods. However, it provides a broad framework for procurement of consultancy services. eGovernance
projects where the entire conceptualisation of services, service delivery framework is determined during
the consultancy phase, may need a clear set of guidelines to be spelt out.

25.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study25
Contract management
Chapter 8 of GFR provides directives on management of contracts. The general principles for entering
into contracts have been given in Rule 204, and some of these salient principles are:
1. The terms of contract must be precise, deﬁnite and without any ambiguities. The terms should
not involve an uncertain or indeﬁnite liability, except in the case of a cost plus contract or where
there is a price variation clause in the contract
2. Standard forms of contracts should be adopted wherever possible, with such modiﬁcations as are
considered necessary in respect of individual contracts. The modiﬁcations should be carried out
only after obtaining ﬁnancial and legal advice
3. In cases where standard forms of contracts are not used, legal and ﬁnancial advice should be taken
in drafting the clauses in the contract
4. In respect of contracts for works with estimated value of INR 10 lakh or above or for purchase of
above INR 10 lakh, a contract document should be executed, with all necessary clauses to make
it a self-contained contract. If however, these are preceded by invitation to tender, accompanied
by General Conditions of Contract (GCC) and Special Conditions of Contract (SCC), with full details
of scope and speciﬁcations, a simple one page contract can be entered into by attaching copies
of the GCC and SCC, and details of scope and speciﬁcations, Offer of the Tenderer and Letter
of Acceptance
5. Contract document should be invariably executed in cases of turnkey works or agreements for
maintenance of equipment, provision of services, etc.
6. No work of any kind should be commenced without proper execution of an agreement as given in
the foregoing provisions
7. Contract document, where necessary, should be executed within 21 days of the issue of letter
of acceptance. Non-fulﬁllment of this condition of executing a contract by the contractor or
supplier would constitute sufficient ground for annulment of the award and forfeiture of Earnest
Money Deposit
8. Rule 204 also provides a framework for price escalation clause, which should be allowed only for
long-term contracts that extend beyond 18 months. Where a price variation clause is provided,
the price agreed upon should specify the base level viz., the month and year to which the price
is linked
9. Contracts should include provision for payment of all applicable taxes by the contractor
or supplier
10. The terms of a contract, including the scope and speciﬁcation once entered into, should not be
materiallyvaried.Wherevermaterialvariationinanyofthetermsorconditionsinacontractbecomes
unavoidable, the ﬁnancial and other effects involved should be examined and recorded and speciﬁc
approval of the authority competent to approve the revised ﬁnancial and other commitments
obtained, before varying the conditions. All such changes should be in the form of an amendment
to the contract duly signed by all parties to the contract
11. All contracts shall contain a provision for recovery of liquidated damages for defaults on the part
of the contractor

26.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study26
12. A warrantyclauseshouldbeincorporatedineverycontract,requiringthesupplierto,withoutcharge,
repair or rectify defective goods or to replace such goods with similar goods free from defect. Any
goods repaired or replaced by the supplier shall be delivered at the buyers premise without costs
to the buyer
13. All contracts for supply of goods should reserve the right of the government to reject goods which
do not conform to the speciﬁcations
14. As per Rule 205, regarding the management of contracts, the following directives are provided:
(1) Implementation of the contract should be strictly monitored and notices issued promptly
whenever a breach of provisions occurs
(2) Proper procedure for safe custody and monitoring of bank guarantees or other instruments
should be laid down. Monitoring should include a monthly review of all bank guarantees or
other instruments expiring after three months, along with a review of the progress of supply
or work. Extensions of bank guarantees or other instruments, where warranted, should be
sought immediately
(3) Wherever disputes arise during implementation of a contract, legal advice should be sought
before initiating action to refer the dispute to conciliation and/or arbitration as provided in the
contract or to ﬁle a suit where the contract does not include an arbitration clause. The draft of
theplaintforarbitrationshouldbegotvettedbyobtaininglegalandﬁnancialadvice.Documents
to be ﬁled in the matter of resolution of dispute, if any, should be carefully scrutinised before
ﬁling to safeguard government interest
Comments on section on contract management
Chapter8ofGFRdealingwithmanagementofcontractsisfairlycomprehensiveandoutlinesthevarious
best practices of contract management. Adherence to these directives will lead to the improvement
in contract management in eGovernance projects too.
Adoption of standard contracts with necessary modifications, in individual contracts is a key
directive, that can be considered for adoption in eGovernance projects. A central initiative to
develop standard contracts for different categories of eGovernance projects, could contribute to
cutting down time and effort in bid phase, for both the buyer and seller. Standard contracts and
their adoption by both central and state government departments, as base templates with
necessary modiﬁcations, additions for speciﬁc projects will surely cut down bid development and bid
response phases.
Price escalation indexed to a base price, in long-term contracts, is another important directive in GFR,
that could be evaluated, in long-term eGovernance services outsourcing projects. These projects span
a tenure of 5-7 years, and have several factors that are subject to cost escalations, that cannot be
predicted during bid/contracting stage.
Central Vigilance Commission (CVC)
CVC was set up by the government in 1964 to advise and guide the central government agencies in
the ﬁeld of vigilance. CVC is conceived to be the apex vigilance institution, free of control from
any executive authority, monitoring all vigilance activity under the central government and advising
various authorities in the central government organisations in planning, executing, reviewing and
reforming their vigilance work.

27.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study27
Consequent upon promulgation of an ordinance by the President, the Central Vigilance Commission has
been made a multi-member commission with ‘statutory status’ with effect from August 25, 1998. The
CVC Bill was passed by both the houses of the Parliament in 2003, and CVC functions under an act of
the Parliament. Additionally vide resolution of Government of India on ‘Public Interest Disclosure and
Protection of Informer’ dated April 2004, the Government of India has authorised the Central Vigilance
Commission as the ‘Designated Agency’ to receive written complaints for disclosure on any allegation
of corruption or misuse of office and recommend appropriate action.
Summary of recommendations of the CVC relating to public procurement
The CVC has studied public procurement practices in detail and over the past 12 years, has
issued circulars to improve these practices. A study of the various circulars issued by the CVC shows
both attention to detail, attempt to plug loopholes and improve upon its past directives, in tune with
new developments.
CVC has issued several circulars on various aspects of public procurement, including eTendering, which
can be reviewed from their website – http://cvc.nic.in/proc_works.htm. Some of the relevant directives
are as follows:
1. The CVC has issued a detailed Circular, 12-02-1-CTE-6, on framing of pre-qualiﬁcation criteria. Some
relevant excerpts – the purpose of any selection procedure is to attract the participation of reputed
and capable organisations with proper track records. The PQ conditions should be exhaustive,
yet speciﬁc. The factors that may be kept in view while framing the PQ criteria includes the
scope and nature of work, experience of organisations in the same ﬁeld and ﬁnancial soundness
of organisations.
2. Organisations may suitably modify these guidelines for specialised jobs/works, if considered
necessary. However, it should be ensured that the PQ criteria will allow fair competition
3. Mandates that the pre-qualiﬁcation criteria, performance criteria and evaluation criteria be
incorporated in the bid documents in clear and unambiguous terms as these criteria are very
important to evaluate bids in a transparent manner
4. Whenever required the departments/organisations should follow two-bid system, i.e.
technical bid and price bid. The price bids should be opened only of those vendors, who were
technically qualiﬁed
5. Mandates that evaluation criteria both for pre-qualiﬁcation and bid evaluation should be explicit
and should not be post facto decided after the opening of the tenders
6. The department should go for techno commercial evaluation to ensure that bidders are technically
qualiﬁed prior to the opening of the technical bids
7. Mandates that due process of tendering should be followed, commercial bids of only those
organisations that meet the eligibility criteria and qualify in technical evaluation should
be opened
8. Tenders should not mention brand name or even reference multinational brands
9. No negotiation with L1 bidder on price, it also clariﬁes that there can’t be any negotiation with the
L2, L3 or any other bidder

28.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study28
10. Mandates publishing of tender awards in the website of the organisation and also other details
like estimated date of completion, progress of the work
11. Prohibits consultants from undertaking downstream work and for bidders for downstream work
to provide consultancy services
12. Mandates time bound ﬁnalisation of tenders
13. Discusses the practice of short-term tenders where newspaper advertisements are not published,
however, CVC mandates publishing short-term tender on the departmental website
14. Widest possible publicity should be given to tender documents including the uploading of the
tender document on the website of the organisation
15. Payments to organisations implementing projects as far as possible, should be made
through ePayment. Prescribes that by July 2004, 50 per cent of payment should be through
ePayment mode
16. Clariﬁes that works can’t be automatically awarded to public sector organisations on a nomination,
without tendering
17. Discusses the practice of PSU’s obtaining work (construction works) without tender and thereafter
sub-contracting 100 per cent of the work. The circular prescribes practices for transparency in the
process of sub-contracting of work by PSU and such open tenders to be invited for selection of
sub-contractors as far as possible
18. Regarding splitting of work, CVC states that in case the quantity for supply exceeds the capacity
of the L1 tenderer, the balance can be distributed to other suppliers
19. Observes practice of adding unnecessary and miscellaneous components in case of procurement of
turnkey contracts (speciﬁcally for networking). Advices departments to take an independent third
party view about the scope of turnkey projects so that the tendency to include unrelated products
as part of the turnkey project is avoided
20. In case of presence of clauses in tender documents such as ‘Tender Inviting Authority can reject
tender applications without assigning any reason’, such clauses should not promote arbitrary
behaviour, and clear logical reasons for rejecting any tender application should be provided
21. Commenting on a complaint on procuring textiles and clothing, raises a speciﬁc issue of submission
of tender samples, inspite of detailed speciﬁcations for items, and samples being rejected on
subjective basis. The guideline advises government departments to consider the procurement of
items on the basis of detailed speciﬁcations, and if required, provide for submission of an advance
sample by successful bidder. This guideline is also relevant in the context of tender samples for
IT equipment and hardware.
22. Provides operational guidelines on
a. Measures to help organisations against counterfeit and refurbished IT products and
counterfeit software
b. Mitigate problems of vendors submitting forged/false bank guarantees, by adopting a best
practice recommended by Canara Bank
c. Giving of mobilisation advance to suppliers

29.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study29
23. eTendering
a. Directs organisations to follow a fair and transparent process to select the application service
provider that will provide eTendering services
b. Prescribing guidelines for security considerations of eProcurement systems
24. Provides detailed instructions for the implementation of integrity pacts in organisations, selection
of independent external monitors, and standard operating procedures for integrity pacts
25. The CVC also circulates the summary of observations of the Chief Technical Examiners’
inspection of various tenders in central government and central government organisations.
This summary provides details of deviations by organisations, regarding various aspects of
tendering like pre-qualiﬁcation criteria, contract terms, giving of mobilisation advance, preparing
speciﬁcations, etc.
26. Provides directions and checklists to chief vigilance officers in departments to audit tenders ﬂoated
by the organisation
27. Directs chief vigilance officers to review time taken for payment of bills by the organisation
28. Guidance on good practices such as members of tender evaluation committees should not have
personal interest in the bidders
29. Expresses concern on the practice of an agent bidding on behalf of manufacturer, and the
manufacturer also making a direct offer in the same tender. Prohibits this practice and directs that
either the Indian agent on behalf of a foreign principal or the foreign principal directly could bid in
a tender, but not both
30. Reverse auctions should be conducted in a fair and transparent manner
31. Recommends that mobilisation advance for works be considered only for select works and advance
should be interest bearing
32. For projectsabove5crorevalue,theCVCrecommendstheappointmentofconsultants.Further,such
consultants should be appointed after a due process and approval regarding their appointment

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eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study30
Summary of various guidelines issues by the CVC from latest to oldest
A detailed overview of speciﬁc CVC circulars is given below for easy reference
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
1 01/01/10 005/
CRD/012
Jan 20,
2010
Negotiation with
L1
Clariﬁes that guidelines on no negotiation
with L1 also implies that there cannot be
negotiation with L2, L3 or L4 on pricing.
Further clariﬁes Circular 3/3/2007
2 29/9/09 009/
VGL/002
Sep 17,
2009
Implementation
of eTendering
solutions
Prescribes guidelines for security
considerations for procurement of
eProcurement system by the department
3 13/6/09 009/
VGL/030
Nov 8,
2009
Intensive
examination of
CTE – Steps for
early ﬁnalisation
Gives details of issues which have been
pointed out by the Chief Technical
Examiner’s office of CVC and for which
response from the department is awaited
4 17/7/09 005/
VGL/4
Jul 14,
2009
Posting of
details on award
of tenders/
contracts on
websites
Reiterates guideline to publish
details of tender award on the
departmental website
5 10/5/09 008/
CRD/013
May 18,
2009
Adoption of
integrity pact –
Standard
operating
procedure
Provides details of standard operating
procedure regarding the implementation
of integrity pacts in organisations
6 1/1/09 009/
VGL/002
Jan 13,
2009
Implementation
of eTendering
solutions
Directs organisations to follow a fair and
transparent tendering process to select
the application service provider that will
provide eTendering services
7 31/11/08 008/
VGL/083
Jun 11,
2008
Time bound
processing of
procurement
Observes that at times the processing
of tenders is inordinately delayed which
may result in time and cost overruns and
also invite criticism from the trade sector.
Therefore, directs departments to ﬁnalise
tenders, and contracts are awarded in
a time bound manner within original
validity of the tender, without seeking
further extension of validity
8 24/8/08 007/
VGL/033
May 8,
2008
Adoption
of integrity
pact in major
government
procurement
Provides guidelines related to the
implementation of integrity pact in
organisations
9 22/7/08 008/
CRD/008
Jul 24,
2008
Referring cases
of procurement
to the
commission
Cautions departments from referring
cases of a general nature having elements
of managerial decision making and
concerning a particular procurement
10 18/5/08 008/
VGL/001
May 19,
2008
Adoption
of integrity
pact in major
government
procurement
Selection and appointment of
independent external monitors for the
purpose of monitoring of integrity pacts

31.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study31
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
11 9/2/2008 008/
VGL/016
Feb 18,
2008
Workshop/
seminar
regarding IT
procurement
Organise seminars/workshops and lecture
classes at frequent intervals to keep
the officials particularly those dealing
with IT procurement activities educated
and updated regarding the procurement
procedures, CVC guidelines. Raises
concern on a number of bank officials
lacking basic skills in computer operations
and knowledge of the banking software.
Tendency on the part of senior officers
to disclose their password to junior
officials/staff for operating the system
on their behalf, citing reasons, including
work pressure and ignorance is criticised.
Therefore, imparting of proper training to
such officers and staff at various levels
particularly those working in the branches
is advised
12 7/2/2008 007/
CRD/008
Feb 15,
2008
Measures to curb
the menace of
counterfeit and
refurbished
IT products
Provides directions on how
organisations can avoid buying
counterfeit and refurbished IT
products and pirated software
13 1/1/2008 02-07-
01-CTE-
30
Dec 31,
2007
Acceptance of
bank guarantees
Provides guidelines to mitigate the
problem of forged bank guarantees
issued by vendors and buyers
14 43/12/07 007/
VGL/033
Dec 28,
2007
Adoption
of integrity
pact in major
government
procurement
activities
Simpliﬁes forwarding of names for the
panel of independent external monitors
15 41/12/07 007/
VGL/033
Apr 12,
2007
Adoption
of integrity
pact in major
government
procurement
activities
Prescribes adoption of Integrity pact, a
vigilance tool promoted by Transparency
International. The pact envisages an
agreement between prospective vendors
and the buyer committing both parties
not to exercise any corrupt inﬂuence
on any aspect of the contract. The
integrity pact also envisages a panel of
independent external monitors approved
for the organisation that will review
compliance to the integrity pact
16 NA NA NA Common
irregularities/
lapses observed
in stores/
purchase
contracts
Detailed report from the chief technical
examiners of the CEC. Looks at ﬂaws in
all aspects of tendering from live ﬁeld
examples in government departments
like preparation of speciﬁcations, pre
qualiﬁcation criteria, submission of EMD,
etc. and prescribes changes required to
mitigate these issues

32.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study32
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
17 23/7/07 005/
CRD/19
Jul 5,
2007
Transparency in
works/purchase/
consultancy
contracts
awarded on
nomination basis
(Office Order No
23-7-07)
Faults the thinking among departments
that works can be automatically awarded
to public sector units on a nomination
basis without need for tendering. States
that awarding of works to PSU’s on
nomination basis should be an exception
justiﬁed only during natural calamities
and emergencies as declared by GOI and
where procurement is possible from a
single source only
18 14/4/07 98/
VGL/25
NA Use of products
with standard
speciﬁcations
As far as possible, items with standard
speciﬁcations should be prescribed in
bid documents as procurement of
non-standard products can lead to cost
increase
19 10/4/2007 4CC-1-
CTE-2
Oct 4,
2007
Mobilisation
advance
Gives additional directions related to
mobilisation advance to contractors.
Approval for such advance should
be taken at the highest level of the
organisation
20 4/3/2007 005/
CRD/12
Mar 3,
2007
Tendering
process –
Negotiations
with L1
States that post tender negotiations
even with L1 can be a source of corruption
and this should happen in only certain
exceptional situations. Convincing
reasons must be recorded by the
authority recommending the negotiation.
In case, the quantity required is more
than what L1 can supply, splitting of
quantities should be done in a fair and
equitable manner. The departments
should also examine if guidelines
regarding splitting of quantities can be
disclosed in the tender
21 37/10/06 005/
CRD/012
Oct 3,
2006
Tendering
process –
Negotiations
with L1
With respect to clariﬁcations received from
organisations regarding no negotiation
with even the L1 bidder, the commission
states that its guidelines were framed with
a view to ensuring fair and transparent
purchase procedure in the organisations.
The guidelines are quite clear and it is
for the organisations to take appropriate
decision, keeping these guidelines in
view. In case, they want to take action in
deviation or modiﬁcation of the guidelines,
to suit their requirements, it is for them
to do so by recording the reasons and
obtaining the approval of the competent
authority for the same. However, in no
case, should there be any compromise to
transparency, equity or fair treatment to all
the participants in a tender

33.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study33
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
22 31/09/06 005/
VGL/004
Jan 9,
2006
Posting of
details on award
of tenders/
contracts on
websites/
bulletins
Reiterates previous circulars on regular
posting of tender awards on website.
Further such tender awards should
comprise atleast 75 per cent of the
total work tendered by the department.
Additionally this information shall be
available to the general public and shall
not be restricted through passwords or
only available to registered suppliers, etc.
23 15/05/06 005/
CRD/19
Sep 5,
2006
Transparency
in contracts
awarded on
nomination basis
CVC feels the need to bring greater
transparency and accountability in
awarding of contracts without tendering
to PSU’s by other PSU’s or Government of
India. In the circumstances, of awarding
of contract on nomination basis to a
PSU, commission recommends that (i)
all works awarded on nomination basis
should be brought to the notice of the
board of the respective PSUs for scrutiny
and vetting post facto, (ii) the reports
relating to such awards will be submitted
to the board every quarter, (iii) the audit
committee may be required to check at
least
10 per cent of such cases
24 21/05/06 006/
VGL/29
Jan 5,
2006
Examination
of public
procurement
contracts by
CVOs
Direction to CVOs with enclosed checklist
to audit the tenders ﬂoated by their
department
25 71/12/05 005/
VGL/66
Sep 12,
2005
Undertaking
by members
of tender
committee
The members of the tender committee
should give an undertaking that none
of them has any personal interest in the
organisations/agencies participating in
the tender process. Any member having
interest in any organisations should refrain
from participating in the tender committee
26 NA 98/
VGL/25
Oct 11,
2005
Intensive
examination of
works by CTEs
organisation
CVO’s of departments will include all
procurement activity in their quarterly
progress report including service,
consultancy contract, medicine supply,
civil works, etc.

34.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study34
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
27 68/10/05 005/
CRD/12
Oct 25,
2006
Tendering
Process
negotiation with
L1
Summarises the conference proceedings
on procurement issues. Summary as
following: 1) There should not be any
negotiations. Negotiations if at all shall
be an exception and only in the case
of proprietary items or in the case of
items with limited source of supply. 2)
Negotiations shall be held with L1 only
3) Negotiations can be recommended in
exceptional circumstances only after due
application of mind and recording valid,
logical reasons justifying negotiations
4) Further, it was observed that at times
the competent authority takes unduly
long time to exercise the power of
accepting the tender or negotiate or re-
tender. Accordingly, the model time frame
for according such approval to completion
of the entire process of award of tenders
should not exceed one month from the
date of submission of recommendations.
In case, the ﬁle has to be approved at the
next higher level, a maximum of 15 days
may be added for clearance at each level.
The overall time frame should be within
the validity period of the tender/contract.
5) In case of L1 backing out there should
be re-tendering as per extant instructions
28 57/09/05 005/
VGL/4
Sep 20,
2005
Details on
awarding of
tender
Directs organisations for complying
with directives regarding publishing of
tender awards and states that this is a
continuous process
29 46/07/05 005/
VGL/4
Jul 28,
2005
Details on
awarding
of tenders,
contracts
publishing
Clariﬁes earlier directive regarding the
publishing details of tender awards and
says that the value of tender awards to
be published should be so set that atleast
60 per cent of the tender awards are
published on the website
30 NA 2EE-1-
CTE-3(Pt)
May 16,
2005
Issues pertaining
to negotiations
with L1
Expresses a view that negotiation
with L1 can also lead to corruption and
cites examples of World Bank directive
regarding banning negotiation with
L1. Invites responses in this regard
from organisations
31 NA 2EE-1-
CTE-3
Apr 12,
2005
Issues pertaining
to negotiations
with L1
Invites responses from organisation
regarding negotiations with L1 bidder
32 11/3/2005 005/
ORD/1
Oct 3,
2005
Delays in
payments to
contractors
CVOs will review the time taken for
payment of bills by organisations
33 13/3/05 005/
VGL/4
Mar 16,
2005
Details on
awarding
of tenders/
contracts
The departmental website should
provide details of all works above a
predetermined value, procured by the
organisation with the following details a)
actual date of start of work; b) actual date
of completion; c) reasons for delays if any

35.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study35
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
34 18/3/05 000/
VGL/161
Mar 24,
2005
Banning of
business
dealing with
organisations
Commission states that banning of
business is an administrative matter to
be decided by the management of the
organisation and the Central Vigilance
Commission does not give its advice in
such matters
35 15/3/05 OFF-1-
CTE-1(Pt)
V
Mar 24,
2005
Notice inviting
tenders
In case of clauses such as tender inviting
authority can reject tender applications
without assigning any reason, such
clauses should not promote arbitrary
behaviour, however, clear logical reasons
for rejecting any tender application should
be provided
36 NA 98/DSP/3 Dec 24,
2004
Participation of
consultants in
tender
Prohibits consultants from undertaking
downstream work and for bidders for
downstream work to provide
consultancy services
37 72/12/04 004/
ORD/9
Dec 10,
2004
Transparency in
tendering system
– Guidelines
regarding
Due process of tendering should be
followed, commercial bids of only those
organisations that meet the eligibility
criteria and qualify in technical evaluation
should be opened
38 69/11/04 004/
ORD/8
Nov 3,
2004
Turnkey contracts
for networking
of computer
systems
Observes practice of adding unnecessary
and miscellaneous components in case
of procurement of turnkey contracts for
networking. Advices departments to take
assistance of third parties to determine
requirements properly
39 68/10/04 98/
ORD/1
Oct 20,
2004
Leveraging
technology –
ePayment and
eReceipt
Reiterates CVC guideline of April 6, 2004
for moving over to ePayment mechanism
40 47/7/04 98/
ORD/1
Jul 13,
2004
Commission’s
directives on the
use of website in
public tenders
Webpage comprising all circulars related
to uploading of tender documents on the
department website
41 43/7/04 98/
ORD/1
Jul 2,
2004
Improving
vigilance
administration
Issues numerous clariﬁcations regarding
the hosting of tender documents on
websites of department. Clariﬁes on
issues like huge size of tender document,
issues related to security of websites,
limited tenders. For limited tenders to
empanelled vendors, CVC clariﬁes that
the exercise for empanelment of vendors
should be atleast undertaken every year.
Clariﬁes that procurement of proprietary
goods from original equipment
manufacturers/suppliers need not be
published on the departmental website
42 NA 4CC-1-
CTE-2
Jun 8,
2004
Mobilisation
advance
Prescribes a due process for giving
mobilisation advance including providing
such details in RFP, obtaining equivalent
amount bank guarantee and deducting
the same over the course of the project

36.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study36
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
43 NA 05-04-1-
CTE-8
Jun 8,
2004
Receipt and
opening of
tenders
In case the tender documents can’t be
submitted in a tender box and need to
be submitted by hand to officials, the
names of atleast two officials should be
displayed prominently in the department
44 25/4/04 12-02-
6-CTE-
SPI(1)2
Apr 21,
2004
Consideration of
Indian agents
Expresses concern about the practice
of Indian agents bidding on behalf of
manufacturers in one tender and in
a similar tender representing some
other organisations and the foreign
organisations bidding directly in the
second tender. Prohibits this practice
45 20/4/04 98/
ORD/1
Apr 6,
2004
Cutting delays
by ePayments
and eReceipt
by government
organisations
Payments to organisations implementing
projects as far as possible should be made
through ePayment. Prescribes that by
July 2004 50 per cent of the payment
should be through ePayment mode
46 10/2/2004 98/
ORD/1
Feb 11,
2004
Increasing
transparency
(tender process)
Discusses the practice of short-term
tenders where newspaper advertisements
are not published, however, CVC
mandates publishing short-term tender
on the departmental website
47 9/2/2004 98/
ORD/1
Feb 9,
2004
Increasing
transparency
(sale)
Reiterated that organisations that
have websites should publish tender
documents on their websites
48 NA 98/
ORD/1
Dec 18,
2003
Improving
Vigilance
administration:
increasing
transparency in
procurement/
sale, etc.
Widest possible publicity should be given
to tender documents including uploading
of the tender document on the website of
the organisation
49 NA 06-03-
02-CTE-
34
Oct 20,
2003
Back-to-back
tie-up by PSUs
Discusses the practice of PSU’s obtaining
work without tender and thereafter
sub-contracting 100 per cent of the
work. The circular prescribes practices for
transparency in the process of
sub-contracting of work by PSU and such
sub-contracted work also shall
be tendered
50 NA 2EE-1-
CTE-3
Oct 15,
2003
Tender sample
clause
Tenders call for submission of sample
inspite of detailed speciﬁcations for items
and samples are rejected on subjective
basis. The guideline forbids rejection of
tenders on the basis of defective samples
51 46/9/03 98/
ORD/1
Sep 11,
2003
eProcurement/
reverse auction
Reverse auctions should be conducted in
a fair and transparent manner

37.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study37
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
52 44/9/03 98/
ORD/1
Sep 4,
2003
Irregularities in
the awarding of
contracts
The circular mandates that the
pre-qualiﬁcation criteria, performance
criteria and evaluation criteria are
incorporated in the bid documents in clear
and unambiguous terms as these criteria
are very important to evaluate bids in a
transparent manner. Whenever required
the departments/organisations should
follow two-bid system, i.e. technical bid
and price bid. The price bids should be
opened only of those vendors who were
technically qualiﬁed
53 33/7/03 98/
ORD/1
Jul 9,
2003
Short-comings in
bid documents
Mandates that evaluation criteria both
for pre-qualiﬁcation and bid evaluation
should be explicit and should not be
post facto decided after the opening of
the tenders
54 NA 98/
ORD/1
May 5,
2003
Purchase of
computers by
government
departments/
organisations
Tenders should not mention brand name
or reference to as multinational brands
55 NA 12-02-
6-CTE-
SPI(1)2
Jan 7,
2003
Consideration of
Indian agents
An Indian agent of a foreign supplier
can’t represent two organisations in the
same tender. He/she should exclusively
represent only one organisation in
the tender
56 NA 98/
ORD/1
Aug 3,
2001
Improving
vigilance
administration –
Tenders (H1)
In case of sale of government goods,
negotiation if at all, should be held with
H1 bidder only
57 NA 98/
ORD/1
Aug 24,
2000
Improving
vigilance
administration –
Tenders
In case L1 withdraws bid the project
should be re-tendered, department
should go for techno commercial
evaluation to ensure that bidders are
technically qualiﬁed prior to the opening
of the
technical bids
58 NA 3(v)/99/9 Oct 1,
1999
Applicability of
CVC’s instruction
No 8(1)(h)/98(1)
dated 18/11/98
on post-tender
negotiations
to projects
of the World
Bank & other
international
funding agencies
While CVC guidelines will not be
applicable speciﬁcally to projects funded
by the World Bank, the department for
other matters shall be bound by CVC
guidelines
59 NA 8(1)
(h)/98(1)
Nov 18
1998
Improving
vigilance
administration
(L1)
Suggests implementation of good
practices for a clean work environment.
Bans post tender negotiation except
with L1
60 NA UU/
POL/19
Oct 8,
1997
Grant of interest
free mobilisation
advance
Recommends that mobilisation advance
should not be given interest-free, but an
interest component should be attached
to such advance

38.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study38
No Office Order
No.
File No. Date of
Issue
Subject Details of the Circular
61 NA 98/
ORD/1
Mar 15,
1999
Improving
vigilance
administration –
Tenders
States that preference may be given to
PSUs for procurement, however, PSUs
should not be covered for other private
undertakings. In case the quantity for
supply exceeds the capacity of the L1
tenderer to supply, the balance can be
distributed to other suppliers
62 NA OFF1
CTE 1
Nov 25,
2002
Appointment of
consultants
For projects above 5 crore value, the
CVC recommends the appointment of
consultants. Further, such consultants
should be appointed after a due process
and approval regarding their appointment
63 NA 3L – IRC 1 Jan 10,
1983
Appointment of
consultants
The circular speciﬁes that PSUs should
recruit consultants in a structured manner
64 NA 12-02-1-
CTE-6
Dec 17,
2002
Pre-qualiﬁcation
criteria (PQ)
Detailed circular on framing of
pre-qualiﬁcation criteria – Extract and
Summary ‘While framing the
pre-qualiﬁcation criteria, the end purpose
of doing so should be kept in view’. The
purpose of any selection procedure is to
attract the participation of reputed and
capable organisations with proper track
records. The PQ conditions should be
exhaustive, yet speciﬁc
65 12-02-1-
CTE-6
May 7,
2004
Pre-qualiﬁcation
criteria (PQ).
Organisations may suitably modify these
guidelines for specialised jobs/works,
if considered necessary. However, it
should be ensured that the PQ criteria are
exhaustive, yet speciﬁc and there is fair
competition. It should also be ensured
that the PQ criteria is clearly stipulated in
unambiguous terms in the bid documents
The complete version of the circulars may be reviewed at:
http://cvc.nic.in/proc_works.htm
While most of these CVC circulars are issued in the context of procurement of works and goods,
several of the directives from CVC are relevant for IT procurement and eGovernance projects too. We
recommend that a comprehensive review of all CVC guidelines be undertaken, and their applicability
in the context of eGovernance projects, and information technology procurement, summarised in a
guidance document from the Department of IT.
Guidelines for procurement under IBRD loans or IDA credits
Given that some information technology projects are funded by external donor/funding agencies, we
thought it was necessary to review their procurement guidelines and recommendations.
IBRD refers to International Bank for Reconstruction and Development (IBRD) and IDA refers to
International Development Association (IDA)
The guidelines can be reviewed at:
http://siteresources.worldbank.org/INTPROCUREMENT/Resources/ProcGuid-10-06-ev1.doc.

39.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study39
The Asian Development Bank (ADB) guidelines are available at:
http://www.adb.org/documents/guidelines/procurement/default.asp
Note – Wherever speciﬁc sections of guidelines are referred, they refer to the relevant sections and
guidelines in the World Bank Document – ‘Guidelines Procurement under IBRD Loans and IDA Credits’.
The ADB procurement guidelines are completely identical to the World Bank procurement guidelines.
Summary of guidelines relevant to public procurement of IT services by government departments in
India are as follows:
1. All goods and services including selection of the concessionaire for BOO/BOT/BOOT projects to be
procured through international competitive bidding procedures with preference for domestically
manufactured goods and where appropriate for domestic contractors
2. Section1.14oftheguidestatesthatitisthebank’spolicythatborrowersaswellasbidders,suppliers,
and contractors and their sub-contractors under bank ﬁnanced contracts, observe the highest
standard of ethics during the procurement and execution of such contracts. In pursuance of this
policy, the World Bank has speciﬁcally deﬁned terms such as ‘corrupt practice’, ‘fraudulent practice’,
‘collusive practice’, ‘coercive practice’. In case the borrower or bidders or contractors commit any of
the above breaches, the bank has deﬁned penalties which include cancellation of bids, cancelling
portion of loan, blacklisting such organisations that engage in corrupt practices or undertaking any
combination of the above measures
3. In order to verify that corrupt practices have not been followed, the bank has inserted the
following clause:
“Will have the right to require that a provision be included in bidding documents and in contracts
ﬁnanced by a bank loan, a provision be included requiring bidders, suppliers and contractors
to permit the bank to inspect their accounts and records and other documents relating to the
bid submission and contract performance and to have them audited by auditors appointed by
the bank”.
4. Procurement Plan: As a part of the preparation of the project, the borrower shall prepare a
procurement plan acceptable to the bank setting forth: (a) the particular contracts for the
goods, works, and/or services required to carry out the project during the initial period of at least
18 months; (b) the proposed methods for procurement of such contracts that are permitted under
theloanagreement,(Note–Inmostcases,ICBorotherprocurementmethodswithduejustiﬁcation)
and (c) the related bank review procedures. The borrower needs to update the procurement plan
annually or as needed throughout the duration of the project. The borrower will implement the
procurement plan as has been approved by the bank.
5. SelectionofConsultants:Iftheprojectincludestheselectionofconsultingservices,theprocurement
plan should also include the methods for selection of consulting services in accordance with the
Guidelines: Selection and Employment of Consultants by World Bank Borrowers
6. The bidding documents shall clearly state the type of contract to be entered into and contain the
proposed contract provisions
7. The bank is ﬂexible regarding the quantum of work to be tendered under a single tender or for
splitting a work and tendering parts of the work separately to attract interest of both small and
large organisations. However, all bids and combinations of bids need to be received by the same

40.
eGovernance & IT Services Procurement Issues, Challenges, Recommendations – A NASSCOM Study40
deadline and opened and evaluated simultaneously, so as to determine the bid or combination of
bids offering the lowest evaluated cost to the borrower
8. Two-stageBidding: In the case of turnkey contracts or contracts for large complex facilities or works
of a special nature or complex information and communication technology, the World Bank desires
a two-stage bidding procedure. As per the process suggested by the World Bank, at the ﬁrst stage,
unpriced technical proposals on the basis of a conceptual design or performance speciﬁcations will
be invited, subject to technical as well as commercial clariﬁcations and adjustments, to be followed
by amended bidding documents and the submission of ﬁnal technical proposals and priced bids in
the second stage
9. WidePublicity: The bank desires timely notiﬁcation of bidding opportunities to enable competitive
bidding. All tenders for which the borrower has obtained a World Bank loan, the bank desires a
detailed general procurement notice to be published in the UN Development Business online
(UNDB online) and in the development gateway’s dgMarket. The tender will further be advertised
in one nationally circulated newspaper in the borrowers country or in the official gazette, or in an
electronic portal with free access
10. The tender shall be advertised such that there is sufficient time to enable prospective bidders to
obtain pre-qualiﬁcation or bidding documents and prepare and submit their responses
11. Pre-qualiﬁcation of Bidders: Under Sections 2.9 and 2.10, the bank desires pre-qualiﬁcation for
large or complex works or where detailed bids are required. Pre-qualiﬁcation also ensures that
invitations to bid are extended only to those who have adequate capabilities and resources.
Pre-qualiﬁcation needs to be based entirely upon the capability and resources of prospective
bidders to perform the particular contract satisfactorily, taking into account their (a) experience
and past performance on similar contracts, (b) capabilities with respect to personnel, equipment,
and construction or manufacturing facilities, and (c) ﬁnancial position. In Section 2.10, the bank
speciﬁes certain guidelines regarding the practice of pre-qualiﬁcation namely:
a. The invitation to pre-qualify for bidding shall be advertised and the scope of the contract and
a clear statement of the requirements for qualiﬁcation shall be sent to those who responded
to the invitation
b. All such applicants who meet the speciﬁed criteria shall be allowed to bid
c. Borrowers shall inform all applicants of the results of pre-qualiﬁcation
d. As soon as pre-qualiﬁcation is completed, the bidding documents shall be made available to
the qualiﬁed prospective bidders
e. For pre-qualiﬁcation for groups of contracts to be awarded over a period of time, a limit for
the number or total value of awards to any one bidder may be made on the basis of the
bidder’s resources
f. The list of pre-qualiﬁed organisations in such instances shall be updated periodically
g. Veriﬁcation of the information provided in the submission for pre-qualiﬁcation shall be
conﬁrmed at the time of awarding of the contract, and awarding may be denied to a bidder that
is judged to no longer have the capability or resources to successfully perform the contract
12. Bidding Documents: Regarding the bidding documents, the bank has the following guidelines:
a. The bidding documents shall furnish all information necessary for a prospective bidder to
prepare a bid for the goods and works to be provided, the detail and complexity of these